Buffett 5-year itch: Oracle bummed about ‘subpar’ Berkshire

Warren Buffett is feeling the heat.

In 2012, for the third time in four years, shares of Buffett’s Berkshire Hathaway trailed the Standard & Poor’s 500 — a position the Oracle of Omaha finds particularly distasteful.

Buffett called the 1.6 percentage point loss to the S&P a “subpar” performance.

“To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch,” Buffett wrote in his annual letter to shareholders.

The letter, anticipated by millions of investors and read for clues into Buffett’s investment strategy, promised an improved performance in 2013.

Buffett said it was his job to do better than the S&P, but that it was hard to do when the index performs well — as it did in 2012.

While Buffett, 82, is correct that Berkshire has never trailed the S&P over five consecutive calendar years, his company does come in second to the S&P 500 for the five years ended yesterday — 14.1 percent to 9.6 percent.

Buffett said he and his partner, Charlie Munger, are reloading their guns and looking to bag some sizeable acquisitions.

“[W]e still have plenty of cash, and are generating more at a good clip. So it’s back to work; Charlie and I have again donned our safari outfits and resumed our search for elephants.”

The letter, written in Buffett’s typical folksy style, reported that Berkshire had a 49 percent gain in profits in the fourth quarter — mostly the result of great derivative bets.

Berkshire shares rose 29 percent in the last year.

The Omaha, Neb.-based company made headlines last month when it combined with a Brazilian investor to buy H.J. Heinz for $23.4 billion.

Smaller acquisitions in 2012 — so-called bolt-on deals — plus organic growth of Berkshire companies helped swell the payroll to 288,462, up 17,604 from 2011, Buffett wrote.

“Our headquarters crew, however, remained unchanged at 24,” he wrote. “No sense going crazy.”

One of Buffett’s best cash cows also got clobbered in the Big Apple.

He said Geico suffered its worst single loss ever in Superstorm Sandy. He noted that Sandy cost Geico more than three times the loss it sustained from Katrina, the previous record holder, due to 46,906 Geico-insured vehicles destroyed.

Meanwhile, he said Berkshire was likely to hike its stakes in its “big four” holdings: American Express, Coca-Cola, IBM and Wells Fargo.

“Mae West had it right: ‘Too much of a good thing can be wonderful,’ ” he wrote.

Buffett also takes investment clues from pop music.

“Charlie [Munger] and I love investing large sums in worthwhile projects, whatever the pundits are saying,” Buffett said. “We instead heed the words from Gary Allan’s new country song, ‘Every Storm (Runs Out of Rain).’ ”

Buffett signaled that he likes newspapers as investments, but only in smaller monopoly markets like Buffalo, NY, where he owns the Buffalo News.

Berkshire also owns five other small-town dailies.

The Oracle of Omaha said big-city papers don’t interest him.